DOJ extends Microsoft oversight, clears search tool

Antitrust regulators find new search tool 'respects' users' choices

By

MichaelPaige

LOS ANGELES (MarketWatch) - The Department of Justice said in a court filing late Friday that Microsoft Corp. agreed to a two-year extension of a key part of its landmark antitrust settlement, while also finding that a new search feature in the latest version of Microsoft's Web browsing software isn't anticompetitive.

The conclusions were part of a regular update that U.S. government regulators and attorneys from a group of states filed with a federal court overseeing the 2002 settlement, which came after Microsoft was found guilty of illegally abusing its monopoly in the market for computer operating system software.

The findings that the new search function of Microsoft's Internet Explorer program "respects" the choices of computer users and PC makers come the same week that an executive from rival Google Inc.
GOOG, +0.57%
called the company "a convicted monopolist" and alluded to the company's past antitrust problems.

Microsoft
MSFT, +1.25%
agreed to an extension until at least 2009 of a program to provide technical data to competitors that allows their rival software products to work with Microsoft's ubiquitous Windows operating system.

The Redmond, Wash.-based giant's Windows software runs more than 90% of the world's personal computers.

The original final judgment stemming from the antitrust case was set to expire in the fall of 2007. If approved by the court, the extension would expire in 2009. Microsoft also agreed that the Justice Department officials and state antitrust regulators may apply in 2009 for an additional three-year extension that would last through November 2012.

An extension is necessary due to Microsoft's difficulty in improving the technical documentation it provides to licensees, officials said.

"This extension will ensure that companies interested in licensing the communications protocols receive the benefit of complete and accurate documentation for the full period of time provided by the court's final judgment," said J. Bruce McDonald, Deputy Assistant Attorney General at the Justice Department's antitrust division.

Additionally, Brad Smith, Microsoft's general counsel, said Microsoft has decided to continue, on a voluntary basis, to document and license the communications protocols in Windows used to interoperate with the company's server software beyond the expiration of the U.S. consent decree.

He said in a statement that the agreement and Microsoft's plan to continue the program means "the licensing of these protocols will effectively become an ongoing part of Microsoft's regular product development and business processes."

The world's largest software company also plans to create an "interoperability lab" that will allow licensees to test and debug their protocols, while getting easy access to onsite Microsoft engineering help, Smith said.

The current protocol licensing program has 31 licensees, Microsoft noted.

New search feature passes muster

Meanwhile, officials said they had studied the new search feature of Microsoft's latest Web browser, Internet Explorer 7, which will allow users to enter a search query into a box displayed on their computer desktop, and found no antitrust concerns.

Antitrust officials found that computer makers are able to set the default search engine when they sell a PC to a consumer. The software also includes a "relatively straightforward method for the user to select a different search engine" themselves, officials said.

"As Microsoft's implementation of the search feature respects users' and OEM's [original equipment manufacturer] default choices and is easily changed, plaintiffs have concluded their work on this matter," they said in the court filing.

Justice workers had additionally received a complaint about the ability of computer makers to customize the "first-boot" experience in the upcoming new version of Windows, called Vista. However, the company addressed that concern and "resolved any possible issue," officials said.

"Plaintiffs have closed their investigation of this complaint," the filing said.

Rob Helm, director of research at independent company tracker Directions on Microsoft, said he wasn't surprised that the Justice Department didn't attempt to extend the settlement to deal with new bundling issues.

"The antitrust case did not specifically find against Microsoft for bundling browsers," he said. "That's really important to remember."

Commenting on Google's concerns about bundling search functions with Windows, Helm said that "if they really want something done against bundling of search and Windows, they're going to have to go back to court."

"[Google] can't count on the Department of Justice to shortcut the legal process for them," Helm said.

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